Stocks Battle Back from Steep Decline

Stocks battled back from a steep drop on Wednesday, but a number of leading technology names ended the day with sharp losses.

A $7.9 billion credit-related writedown at Merrill Lynch and a bigger than expected drop in existing home sales sent blue chip indexes nearly 2% lower for much of the day, and the Nasdaq was down by 3% at its lows on big declines in, Juniper Networks and Broadcom.

But rumors of an emergency Federal Reserve rate cut sparked buying late in the day, even though the Fed is unlikely to take emergency action a week before its next meeting. The Dow and S&P erased nearly all of their losses, and the Nasdaq ended the day 0.9% lower.

But a number of tech names suffered big losses on the day. Amazon lost 12% on margin concerns despite beating estimates. Broadcom tumbled 17% on a big drop in net income, sending the chip sector 3.5% lower, and Juniper, Corning, Altera, RF Micro, Data Domain and Riverbed also fell sharply on their quarterly results.

QLogic was a rare earnings standout, vaulting 11% on its results.

But the day’s biggest winner was Transmeta, which soared 233% to $13.93 after settling a patent dispute with Intel. Intel lost 3% on the day.

After the close, VMware beat estimates in its first quarter as a publicly traded company and traded nearly 7% higher on the news, while Symantec fell 8% despite beating estimates. And Microsoft beat Google to the punch with a $240 million investment in Facebook. Microsoft will report its quarterly results after the close on Thursday.

The Nasdaq fell 24 to 2774, the S&P lost 3 to 1515, and the Dow slipped 1 to 13,675. Volume rose to 3.95 billion shares on the NYSE, and 2.8 billion on the Nasdaq. Decliners led by a 20-12 margin on the NYSE, and 20-9 on the Nasdaq. Downside volume was 63% on the NYSE, and 77% on the Nasdaq. New highs-new lows were 74-166 on the NYSE, and 87-187 on the Nasdaq.

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